Daily Flows & Insights – Narrow Path Becomes Narrower Still as AUD Regains Lost Ground

Daily Flows

  • We saw significant flows from investors locking in duration yesterday with exceptional rates from multiple A1/A banks. A rate of 5.35% at the 2 and 5 year tenors yesterday proved particularly popular.
  • Upward moves in yields on the back of March inflation data has seen clients locking in 3-5 year bank paper as BOQ continued to be a popular name amongst our investor base following their recent upgrade to A2/A-.
  • A 6 month BBSW rate that has progressively crept north of 4.70% has seen outright NCD yields of 5.25% available in recent days.

Narrow Path Becomes Narrower Still as AUD Regains Lost Ground

  • The Aussie dollar has regained ground over the last week after plummeting 4.5% from April’s high of 66.42 US cents to as low as 63.63 this month, with the AUD touching 65.85 yesterday.
  • The yen recovered overnight from its weakest level against the USD in 34 years amidst speculation the Bank of Japan had intervened in the currency market to support the plummeting currency.
  • A hotter-than-expected March inflation data print, along with persistent labour market resilience, will provide plenty of talking points for the RBA’s meeting next week, with analysts expecting another pause in the cash rate albeit with a potentially hawkish tone.
  • Interest rate markets have been digesting last week’s inflation data with significant moves in projections for the year, with almost half a hike priced in to September’s implied level.
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Curve Team
Josiah Binet